Letter from Langdon: Corporate Power Means Huge Profits for Big Ag and Bare Bones for Farmers
What do you call four corporations in a basement? Eighty-five percent of the meat market. Sonny Perdue jokes about whiny farmers, but there’s nothing funny about how a few corporations control prices for both consumers and farmers.
In 2008 we staked our hopes on President Obama. And when Obama nominated former Iowa governor Tom Vilsack to head up USDA (with its oversight of the Grain Inspection Packers and Stockyards Administration (GIPSA) there was optimism that with a sympathetic ear in government, independent farmers and ranchers would finally see crucial support to liberate captive livestock markets—an important step to bolster family farms.
Times like that are the reason history books are written. Unfortunately a best seller in the making lacked the happy ending we hoped for and never went to press. That’s because powerful interests imposed their will in Congress and on the administration to maintain the status quo in favor of corporate control and profits at farmers’ expense.
Then farmers found what they hoped to be another savior from the bad and the ugly of farm policy. Alas, under a new administration, USDA Secretary Sonny Perdue unfortunately told a joke about farmers being whiners. (“What do you call two farmers in a basement? A whine cellar.”) Adding injury to insult, he repeated what another famous Republican ag secretary under Richard Nixon, Earl Butz claimed, that farmers need to “get big or get out.” He could have talked all day and not said that.
Monopolies win again.
Except for Clinton Ag Secretary Dan Glickman, who left government service to work for the Motion Picture Association of America, retiring ag secretaries put their Rolodex to work in the private food sector. Thanks to his new-found USDA connections, Sonny has a future well above the basement in concentrated ag, while the rest of us try to figure out what getting big will do for us.
For over 50 years the future I’ve seen in farming has been closing windows of opportunity shaded by corporate money grabs. Once lauded for their expertise in livestock production, my great grandfathers, my grandfathers, and my father sold into competitive hog and cattle markets that were open to all. They made good sales and coulda-been-better sales, but supply and demand, quality, and timeliness determined the price and profits they received. Today it’s all but impossible to raise hogs or poultry as a big (or any other size) independent farmer. U.S. cattle producers have a better chance, but with just four multinationals comprising 85% of the cattle market, the future is plain to see. The only bright spot, if you call it that, is that Walmart is opening its own beef slaughter facility. If successful, the biggest food retailer in America could give the multinational “Big Four” a super-sized taste of their own medicine.
More bad news—well known down-and-out dairy conglomerate Borden (their long time mascot Elsie the cow is homeless) tried to sell itself to the creamery giant Dairy Farmers of America. Milk production has consolidated more and and at a quicker pace than any other farm-raised food market in America. That might be why Walmart is also expanding its private label on dairy products.
With our dairies unable to export their way out of surplus while America plays host to foreign dairy import dumping, a snowball in Australia has a better chance than a family owned American dairy.
Here’s how it works on the farm today.
The ethanol bone’s connected to the corn bone, and the corn bone’s connected to the soybean bone, and the soybean bone’s connected to the export bone, and the export bone’s connected to the dairy bone, and the dairy bone’s connected to the conglomerate bone, and the conglomerate bone’s connected to the pork, beef and chicken bone.
In this scenario the funny bone is not connected to anything because there’s nothing funny about this.
This is where big oil comes in, because without an EPA mandate for ethanol blended into gasoline at the refinery, a steady decline in the number of functioning rural ethanol refineries is inevitable. Then the market for close to half the nation’s corn crop is at risk. With over 40 U.S. refinery’s asking for and receiving waivers allowing them to omit ethanol from their finished product, another market door for U.S. farms is swinging toward the jam. That comes alongside U.S. -export-dominated soybean markets that saw carryover surpluses grow with the loss of markets for about 25% of all soybean production that traditionally were sold to China. Even with windfall government payments and a resumption of trade, there’s little to rid markets of price depressing surpluses built up the last two years.
We raise another new crop every year.
When surpluses disappear, farms are profitable. When surpluses build, farmers lose money. As surplus-burdened corn farmers have learned for decades, and soybean farmers are learning now, all farm products are related to each other and to their markets once they exit the farm gate.
By controlling slaughter rates and slowing purchases of fat cattle, meatpackers create a surplus of live cattle on one side of their operation and stronger demand for the final product on the other. Packers are already profiting about four times as much on cattle as the farmers and ranchers who grow them. And when Elsie the dairy cow can’t find a home, her low quality beef depresses the wholesale price of all beef even more.
It’s not multinational packers who bear that burden, but the farmers and ranchers who have those animals to sell.
In the old days when generations of my family grew livestock and sold them at terminal markets in Omaha or Kansas City, cheap corn meant profitable livestock. What one didn’t earn the other returned. Those days are gone because in modern times everything on the farm is cheap except the corporate inputs we buy to grow our crops and livestock.
Although it’s not quite so bad for non-GMO wheat and rice, growers of grains and oilseeds are under a bigger, heavier thumb than ever before. Patented seeds, pesticides, and fertilizer bones are seemingly unconnected from all their crop production bones, because pricing of those inputs farmers need to be competitive and affordable has no relationship to the prices our crops win in the marketplace. Grains can go down in price on any given day. But monopolized crop inputs bear no relationship to anything resembling supply and demand. In fact the input prices most of us pay today were established when grains were worth twice what they are today.
Those farm price highs happened during the Obama administration, when we enjoyed unfettered trade and strong environmental policies.
That’s because all them bones are connected.
Richard Oswald is a fifth-generation Missouri farmer from Langdon. He is membership and policy director for the Missouri Farmers Union.